Episode #1 Do you have an Emrgency Fund?

Financial experts generally agree you should keep an emergency fund of 3-5 months of living expenses in a savings account, certificate account, or investment account. Having these funds accessible can be the difference between a temporary hardship and a life-long debt trap.

There are many reasons why you might need to use that money. It could be from an unexpected expense, like a medical bill or a car repair. It could also be job loss that forces you to tap out your savings. Whatever the cause, it’s a whole lot cheaper to pay for it out of savings than to have to borrow, and it’s much less embarrassing than having to beg friends or family to cover your bills.

Make an emergency budget – and stick to it! Without an emergency fund, you’re one blown tire, one missed shift or one broken arm away from a financial catastrophe. That’s why an emergency fund is so important. Cut spending wherever you can. If you can do without cable for a few months, call and suspend service. Temporarily cutting back on media, clothes, and other discretionary spending even selling old items or items you no longer use that are taking up space can give you a little extra cash.

If you're just starting out, start small. If you try and change your spending habits drastically, its harder to maintain. Determine a starting point that's comfortable and grow your commitment every 1-3 months until you're contributing a healthy level (example: $10 a paycheck or 5% and work your way up from there)

For more information on starting an emergency fund, consolidating debts, starting a budget, or other related financial advice you can review our resources throughout the MembersAlliance website or ask our financial service professionals directly.

 

Episode #2 Have you checked your credit report lately? It might not be a bad idea.

Your credit report/credit score is a powerful indicator of your ability to manage and pay your bills that is used by a variety of people, from landlords, to insurance companies, potential employers, and of course primarily lenders. It can affect your ability to be approved in signing a lease for the apartment you want, what premiums you pay on insurance, whether your hired for your dream job or just your next job, and of course whether you’re able to borrow money.

What lenders see when reviewing your credit report and credit score may not only determine whether or not to approve a loan for that home, car, or appliance purchase, or credit card approval, but also HOW MUCH you have to pay for those purchases. The lower the score, the higher the interest rate, the more you pay. This can add to hundreds, thousands, even tens of thousands over a matter of a few years!

So most importantly, how do you check your credit report? You’re entitled to an annual credit report from each of the three major credit reporting agencies. Order yours at www.annualcreditreport.com.

If you notice any discrepancies you can dispute those and have them corrected for all three credit bureaus right on the site. It is estimated over 20% (1 in 5) of people have errors on their credit report.

Here’s a few quick tips to improve or help protect your credit score:

  1. Pay your bills on time and consider automatic payments. If you find keeping track of due dates to be a challenge and would prefer one less thing to worry about, consider signing up for automatic payments. Paying your bills on time is one of the biggest factors credit bureaus use in calculating your score. Late payments can absolutely ruin an otherwise healthy credit score.
  2. Pay more than just the minimum payment on your credit cards and pay your credit card bills before they’re due. You will pay down your debts faster, pay less interest. The less you owe, the better of course, but the quicker you pay down debts, especially revolving debts, such as credit cards, the stronger your credit score.
  3. Take steps toward fixing your credit. Look to make past due loans and credit cards on time (if you speak with your lender they may help with setting up a repayment plan and begin reporting you as on time with the credit bureaus).
  4. Report possible fraud immediately. That ranges from lost or stolen debit/credit cards to falsely opened accounts or other forms of identity theft. The sooner you report the fraud the easier it is the get it cleared up.
  5. Ask us for help. If you have questions, we’re here to help. If your debt has become unmanageable, consider debt consolidation. We can probably help with that too.

Episode #3 How long should you finance your vehicle? Consider a number of factors before finalizing your purchase.

There is no predetermined answer to this question as everyone’s situation is different. That being said, you should know what you’re comfortable paying (not just as a monthly payment but overall for a vehicle), the type of vehicle you want, what features are important to you, and don’t be pressured into something you can’t afford or don’t want. If you’ve done your research and don’t overspend, you’ll likely have more equity built up when it comes time to get another car.

A quick Google search (10-2019) will tell you that the average terms on car loans are at all-time highs with new cars averaging 69 months and used cars averaging 65 months!

When making a vehicle purchase, it’s smart to consider not just thing such as fuel economy, reliability, and available technology, but also the practical use for your needs. Additional features on vehicles today are amazing and have the ability to make our lives easier. Just remember: the more features it has the more it will cost. If you’re limited on the amount you can put down at the time of purchase, you will be financing more likely making not just your payment higher but the term of your loan longer to keep the payments affordable. Limiting features to what you need, and keeping in mind your practical use of the vehicle when making your purchase can bring down the cost and keep it from becoming a strain on your wallet.

It’s also important to consider whether or not your vehicle may be not be worth what you owe on it at some point during your repayment term. If that may be true, which your lender should actually be able to forecast for you, you should strongly consider GAP insurance. If you were to be in an accident and your vehicle was totaled GAP, or Guaranteed Asset Protection, covers the difference of what your auto insurance company will pay (usually only the current value of the vehicle) vs. what is owed, covering the GAP in coverage.

If you have any questions about your next auto purchase, want to determine what you can afford are ready to get pre-approved, or you’re paying too much for your current auto loan, let us know…we can help. Just call, click, or stop in!

 

Episode #4 Does your company offer a retirement plan (401k, pension, etc.)? If so, are you contributing to it?

A 401(k) program is a retirement account named for the section of the tax code governing it (section 401(k)). It is an alternative to traditional pension plans that puts the responsibility of saving for retirement on the shoulders of the employee. Instead of the company holding a pension fund and paying retired employees each month, employees make contributions to a tax-deferred account they can invest in stocks, mutual funds and other instruments. Once they retire, they can start taking money out of the account to pay for living expenses.

The account is “tax-deferred” – meaning contributions get subtracted from your taxable income. Withdrawals are taxed as ordinary income. For people in their peak earning years, this usually results in a considerable tax savings.

Many employers also include special incentives for contributing. They may provide “matching” funds, where the company will match an employee’s contribution dollar-for-dollar, up to a percentage of the employee’s income. For instance, if you make $50,000 per year and your employer offers 3% matching funds, they will contribute up to $1,500 that year if you are putting in at least 3% yourself. If you’re not, often they will not either, so you are essentially missing out on “free” money.

If your company does not have a 401(k) plan, pension plan, or other type of qualified retirement plan, or you’re self-employed, consider opening an IRA (Individual Retirement Account) with your local credit union to begin saving for retirement and at least save a little more through the established tax benefits of contributing to IRAs.

If you’d like information on IRAs or have general questions, let us know. We’re here to help! Just call, click, or stop in!

 

Episode #5 What's the difference between debit and credit?

A debit card is a card linked directly to your checking account. It can be used to make purchases, withdraw cash from an ATM, or even pay bills online or over the phone. It is typically a VISA or MasterCard, occasionally Discover, but is always linked to a checking account where funds from the purchase, withdrawal, or bill payment are taken from. You should make sure you know what is in your account before using your debit card for purchases.

A credit card looks very much the same and can be used for similar uses but the money itself comes from a predetermined limit available to you to borrow against. It may be $500, $1000, $2000, $5000 or more. A credit card is a loan and is derived from receiving credit. It is borrowed money that must be repaid. It is used in the same sense when talking about your credit report, credit bureaus, or your credit score.

When making purchases, what’s the difference?

This more based on how the transaction is processed. If using a credit card the transaction must be processed as a credit transaction. If it is a debit card, the transaction may be processed as a debit transaction or a credit transaction.

It’s important to understand regardless of how it is processed, when you use your debit card, the funds will come out of your checking account. A debit transaction simply requires a PIN (Personal Identification Number) to complete whereas a credit transaction requires a signature or the retailer’s acceptance the transaction is valid (if they do not require a signature).

Debits and Credit to your account

This terminology is accounting based when balancing accounts and you may hear something like “you’ve received a credit to your account”. A credit simply means an addition of funds to your account, while a debit transaction is a withdrawal. This is where the name debit card was derived as the purchases are withdrawals from your account.

If you have more questions or would like additional information, we can help!

 

Episode #6 Are you aware of the application deadlines for financial aid (FAFSA) to help cover costs of college tuition?

You should consider filing as soon as possible to maximize your potential benefits within your state. Filing became available October 1, 2019 for the 2020/2021 school year with a deadline of June 30, 2021. For more information on FAFSA requirements and deadlines visit FAFSA.gov.

You should also double check enrollment and application deadlines with your selected college/university. It’s important to note schools and states all may have varying deadlines. The same goes for different scholarships and grants.

If you’ve done all the financial aid requests and still have a funding gap, take a look at our student loan program with Student Choice.

 

Episode #7 Is your current credit card really benefitting you?

There are a lot of credit card programs out there and often consumers can find themselves with a card that isn’t really benefitting them. Most credit cards these days offer some sort of rewards/cash back program which is great but shouldn’t be your only consideration.

Sure, maximizing rewards is great when you’re able to pay off your credit card every month, but the fact is, the majority of us aren’t able to do that all the time. According to NerdWallet as of 6/2019:

  • 55% of Americans don’t pay off their credit card debt monthly
  • Have an average interest rate of 17.30%APR or Annual Percentage Rate
  • The average balance is approximately $8,400

There are plenty of factors to consider when selecting the right credit card for you. Unless you’re consistently able to pay off your balance every month, rewards, style, and brand should not be at the top of the list. They can and certainly will still be factors, but don’t let them be the driving force in your decision process. Start with interest rate, then look at fees associated with the card, then consider features like cash advance accessibility, late/early payment terms, local servicing and support, all to help determine the right fit.

Also, retail store cards may have some benefits you value but be extra weary of their interest rates. Commonly 25% and higher these cards can end up handcuffing consumers with payments they simply cannot afford.

If you’d like to learn more about the unique features available with the MembersAlliance VISA Credit Card, you can learn more HERE.

 

Episode #8 How can you prepare or protect yourself against financial and identity scams?

When it comes to your money and your personal information, it is as important as ever to protect yourself from criminals and fraudsters. Technology has made our lives remarkably easier and access to information and services notably faster. Unfortunately, this also leaves us and our information more vulnerable to those who may want to misuse that information for personal gain. There are a variety of ways you can protect yourself, to help limit the potential access to your information. You should also regularly monitor your credit report (you can do this for free at www.annualcreditreport.com), and if you suspect fraud or worry what others may have access to you can look at enrolling in Identity Protection to monitor your information and protect you when identity thieves attempt to access or use your information.

 

Episode #9 Does Holiday spending put a strain on your wallet every year? It doesn’t have to.

The holidays are a time of excitement, family, friends, giving, joy…often with that comes the shopping, presents, planning, cooking, travel, and more which can be a little stressful, especially if you don’t have some money set aside for all the extra costs. If you are a little stressed this holiday season look at some low interest loan options to get you through this year and then get ahead of the game in 2020. Look at a Christmas Club account. You can put in as much or as little as you’d like but if you’re paid bi-weekly (26 paychecks) and toss in $20 a paycheck, you’ll have saved $520 for next year! Now, that may or may not cover all of your expenses, but having an extra $500 available next Christmas sure would make the holidays less stressful, wouldn’t they? If you can easily afford to put more aside, doing so now will most certainly make next year’s holiday season just a little more Merry and a little less worry!

 

Episode #10 When is the last time you had your vehicle serviced? Following manufacturer’s recommendations on maintenance can increase the life of your vehicle and decrease the repair costs drastically.

When it comes to standard oil changes the rule of thumb used to be every 3 months or 3,000 miles. In modern cars this is often not the case with most going 5,000-6,000 or 6 months, with some stating 7,500-10,000 or even 12,000 or 12 months for fully synthetic oil. For the remainder of your scheduled maintenance, although it can be important to listen to a mechanic you can also review your owner’s manual for an accurate maintenance schedule to follow. If you cannot locate your owner’s manual, you can likely search it online by typing in the YEAR MAKE MODEL and adding owner’s manual.

 

Episode #11 MembersAlliance recommends that you know your available options when considering consolidating debts.

The post-holiday month brings New Year’s resolutions, reflection, and renewed goals to focus on in the coming year. One of these goals often times has to do with paying off or down existing debts that have either been around too long or recently accrued with holiday and travel spending. Of course this isn’t the only good time to look at consolidating or restricting debts. “Now” is as good a time as any. There are a variety of options to consider when looking at the best one or combination but some important factors to consider include:

  • Ability to repay
  • Current Interest Rate vs. New Interest Rate
  • Length of time needed/desired of Repayment
  • Comfort of monthly payment

Of course you want to pay it off as soon as possible but factor in your ability to afford the monthly payments along with your recurring monthly obligations and your ability to save a little for emergencies and next planned/holiday expense. Having a plan in place, even if that takes 1, 2, 3, 5+ years is setting yourself up for success vs. loosely aiming to pay it off as soon as possible.

Here are some common debt consolidation tools, typically listed in order of interest rate favorability, although special offers that fit your timeframe needs might make some more appealing than others:

  1. Home Equity Loan or Mortgage cash out refinance. This should be reserved for higher quantities of debt consolidation because not only will you be paying more in fees to set these up than other loans, you will typically be holding the debt for a longer period of time (with the exception of a Home Equity Line of Credit – HELOC – which is an open-ended loan that serves much like a low interest credit card available whenever you need it). These can be useful for unexpected emergencies that exceed your existing emergency fund as well.
  2. Personal Loans. For many consumers this is the most clear cut option for wiping out debts. Unexpected bills like medical, home or auto repairs, credit cards, and more can be moved into a personal loan typically with terms available from one to five years giving a specific payment every month and a defined payment amount due each time.
  3. Credit Card balance transfers. For those who plan on paying off these debts fairly quickly, are diligent enough to set monthly payments that will pay down there debt in the desired time, but still like the flexibility and rewards a credit card offers, this may be the right solution. There are a variety of cards available out there with varying offers for balance transfer; make sure you’re selecting one that truly matches your needs. If you’re likely to carry a balance, even if only occasionally, a low interest credit card is most certainly the best fit for you.
  4. Auto loan refinancing. This one is a little out of the box but may be the right solution for you if your debt consolidation timeline matches your current auto loan payoff timeline…and you have enough equity in the vehicle. For example, if you owe $10,000 on your vehicle and it is worth $15,000, you can actually refinance your auto loan for the $15,000 using the extra $5,000 in equity to pay off your other bills. In cases where you need to lower your overall monthly payments, extending the term (ex. You have 36 months left, but refinance for 48 months), you would be able to lower your monthly payment making it more affordable and not putting such a strain on your wallet.

At the end of the day, only you can decide what options are best for you, but after researching these options you are still undecided or have more questions, our experienced staff is here to review your options and help guide you through the decision making process. You can contact us at 815-226-2260 or click here.

 

Episode #12 Are you teaching your children about money?

When discussing money with children, it’s important to strike the balance between honesty and TMI. So, how can we inspire a healthy attitude toward money in our somewhat impulsive and irresponsible children?

If you’re talking to kids of pre-school age, you’ll focus on awareness — simply teaching them that the things you buy will cost money. You’re not going to talk about interest rates and credit cards at this point, but you want your little ones to understand the concept of a money supply being finite and the need to make choices, plus the trade-offs of choices.

For the elementary school-aged kids learning about debt, you can begin introducing ideas like time costing money and credit and debit card security.

The oldest group of kids can handle deeper concepts like interest rates, credit scores and amortization.

Is your child a visual learner? Take a look at our Banzai! Program. It is an interactive real-world simulator for multiple ages including adults! Plus, it has a vast resource library to learn more about specific topics from saving to investing, what’s credit to buying your first home and plenty more. The best part is…it’s all free to you! Just click HERE to explore and get started.

 

Episode #13 Do you think you’re getting a low interest rate on your credit card?

With all the flak they get, you might want to ditch your credit cards for good. Well…maybe not. First, credit cards can boost your credit score. You’ll need a credit history and a respectable credit score to qualify for any major loan. If you don’t have any open credit cards, it’s going to be difficult for you to land a favorable loan term. Plus, your cards have purchase protection. Lots of credit card companies offer theft and loss protection for purchases that are made on your card.

Of course, credit cards must be used responsibly: Always pay your bill on time, don’t spend more than you can afford. And don’t sign up for a card that has an annual fee.

BUT…How do you know what is a good interest rate and should you care when it comes with lots of rewards? The fact is, over 50% of credit card users carry a balance on their credit cards which means they are paying interest often 15, 20, 25, or even 30%+!!! So what’s a good interest rate? Regular rates below 10-12%APR would be considered low for a credit card. If it’s your first card or you’ve had some recent credit challenges 15-20%APR may be something you have to manage for a while you rebuild your credit. On the plus side credit unions like MembersAlliance are often on the lower side while still offering a rewards program so you’re really maximizing your benefit. Want to learn more or how to get a MembersAlliance credit card? We can help.

 

Episode #14 Do you keep a household budget?

Whether it’s a pen, a computer or a free mobile app, there’s plenty of tools available. Creating and sticking to a monthly budget will force you to be accountable for your spending while giving you a clear idea of your financial reality.

In 3 steps:

  • Track your spending over three months.
  • Divide your expenses into categories, such as mortgage, groceries, etc. Use an average of the last three months to set a reasonable spending limit for each category.
  • Going forward, track your spending and be sure to stick to your preset limits for each category.

If your budget reveals your monthly income doesn’t cover your expenses, or you find you’re overspending in any area, look for ways to cut back.

Carrying long-term debt can mean paying exorbitant amounts of interest for years on end. It can also devastate your credit score. Make a complete list of all your outstanding debts in order from smallest balance to largest. Review your monthly budget and look for ways to cut back. Work on paying off your smallest debt with the money you trimmed from your budget. Once you’ve paid off that debt, move on to the second-smallest. Repeat until you’re completely debt-free.

How MembersAlliance CU can help: If you’re carrying multiple high-interest rate debts, consider consolidating those debts to one easy monthly payment with a personal loan, home equity loan, or credit card balance transfer. This way, you’ll only have one low-interest loan payment each month. It may even reduce the total amount you’ll pay each month. Speak to a representative at MembersAlliance CU today to discuss this option or click here to apply.

Finally, make room in your budget for saving. We use the mantra “pay yourself first”. What we mean is…look at your savings account as a bill you have to pay. According to the Federal Reserve, 40 percent of Americans can’t cover a $400 expense. Living without a safety net means a relatively small, unexpected expense can throw off your finances and force you into debt. Aside for paying for emergencies, savings can help fund your long-term plans, goals and dreams.

 

Episode #15 How would you like to be a millionaire?

A million dollars. For many people, it’s the pinnacle of financial success. For others, it’s just the first stepping stone toward their outrageous dreams. But how long does it take to actually reach that goal? How much would you need to save on a monthly basis to net a cool million? And, most importantly, is achieving millionaire status even within the realm of possibility for most Americans?

If you’ve ever seriously considered these questions with the intention of implementing the answers in your own life, or you’re simply curious, we’ve got the inside scoop. We’ve crunched the numbers and worked out the math to help you find out exactly how long it takes to become a millionaire.

Believe it or not, a million dollars is approximately four times the median net worth of retirement-aged people in the U.S. Even more incredible, a net worth of a million dollars is well within the reach of most Americans. You don’t need a six-digit salary to make it to the millionaires’ list; all you need is enough time and a sound investment strategy.

The amount of time it will take you to become a millionaire depends on the following factors:

1.   The amount of money you invest

2.   The rate of return on your investment

The table provided here gives you an idea of how much you’d need to save, and how many years it would take you to reach $1 million, at various rates of return.

Monthly Savings

Years to $1 million with 10% annual returns

Years to $1 million with 8% annual returns

Years to $1 million with 6% annual returns

Years to $1 million with 4% annual returns

$100

44.5

52.9

65.7

88.6

$500

28.8

33.4

40.1

51

$1,000

22.4

25.5

29.9

36.7

$1,583

18.4

20.7

23.8

28.4

$2,083

16.2

18

20.4

23.9

$3,166

13

14.2

15.8

18

$4,166

11

12

13.2

16.8

The amounts used after the $1,000 mark in this table represent the numbers that single and married employees can contribute to their IRAs and 401(k) plans, with $4,166 representing the collective maximum monthly contributions for a married couple. Note: Maximum contributions, as of 2019, are set at $19,000 a year for 401(k)s and $6,000 a year for traditional IRAs.

If you already have a tidy sum saved up, and/or you’d like to see how long it would take you to reach a million by socking away a monthly amount that is different than any amounts shown on this table, you can input your own formula into the savings calculator to get the answers you need.

Getting started

Now that you’ve determined how long it will take you to reach your first million, don’t waste any time getting started. If you’ve made this your goal, the sooner you begin investing, the less money you’ll have to put away each month, and the sooner you’ll reach $1 million.

The easiest and most basic starting point for your million-dollar prize is to maximize your contributions to your employer’s 401(k) and your own IRAs and HSAs. Next, look into investing with a low-cost index fund, mutual fund or lifecycle fund.

If you can’t spare the money you’d need for investing enough funds to achieve your goal, take some time to review your budget and to plug up any expensive holes. Look for pricey habits you’d be better off giving up, subscriptions you can do without and entertainment costs you can trim without feeling the pinch. It might not be easy to make all those changes, but with a million-dollar finish line in sight, you should have all the motivation you need to start living a financially responsible life today.

Are you ready to start investing your way toward one million dollars?

 

Episode #16 Do you know your credit score and what’s on your credit report?  

If you don’t, it might be a good idea to check it out. Your credit report/credit score is a powerful indicator of your ability to manage and pay your bills that is used by a variety of people, from landlords, to insurance companies, potential employers, and of course primarily lenders. It can affect your ability to be approved in signing a lease for the apartment you want, what premiums you pay on insurance, whether your hired for your dream job or just your next job, and of course whether you’re able to borrow money.

What lenders see when reviewing your credit report and credit score may not only determine whether or not to approve a loan for that home, car, or appliance purchase, or credit card approval, but also HOW MUCH you have to pay for those purchases. The lower the score, the higher the interest rate, the more you pay. This can add to hundreds, thousands, even tens of thousands over a matter of a few years!

So most importantly, how do you check your credit report? You’re entitled to an annual credit report from each of the three major credit reporting agencies. Order yours at www.annualcreditreport.com.

If you notice any discrepancies you can dispute those and have them corrected for all three credit bureaus right on the site. It is estimated over 20% (1 in 5) of people have errors on their credit report.

Here’s a few quick tips to improve or help protect your credit score:

1. Pay your bills on time and consider automatic payments. If you find keeping track of due dates to be a challenge and would prefer one less thing to worry about, consider signing up for automatic payments. Paying your bills on time is one of the biggest factors credit bureaus use in calculating your score. Late payments can absolutely ruin an otherwise healthy credit score.

2. Pay more than just the minimum payment on your credit cards and pay your credit card bills before they’re due. You will pay down your debts faster, pay less interest. The less you owe, the better of course, but the quicker you pay down debts, especially revolving debts, such as credit cards, the stronger your credit score.

3. Take steps toward fixing your credit. Look to make past due loans and credit cards on time (if you speak with your lender they may help with setting up a repayment plan and begin reporting you as on time with the credit bureaus).

4. Report possible fraud immediately. That ranges from lost or stolen debit/credit cards to falsely opened accounts or other forms of identity theft. The sooner you report the fraud the easier it is the get it cleared up.

5. Ask us for help. If you have questions, we’re here to help. If your debt has become unmanageable, consider debt consolidation. We can probably help with that too.

 

Episode #17 Could you benefit from a couple simple life hacks to take some of the stress out of your daily life?

Here are a couple quick tips to hack your finances in 2020:

De-clutter your finances - As you sift through the “stuff” piled up around your home and throw out useless clutter until each closet would make Marie Kondo proud, it’s a good idea to do the same for your finances.

Review your monthly budget and cut out extra expenses that may be cluttering it up. Think about things like subscriptions you don’t use anymore or upgraded apps and services you don’t really need. Next, simplify your monthly bill-paying by moving all due dates to the same day and setting up an automatic payment so you’re never late.

Clean up your money management by using a personal finance app like YNAB or Mint to budget and keep track of your spending with minimal effort. Finally, simplify your savings by setting up an automatic monthly transfer between your MembersAlliance CU Checking Account and MembersAlliance CU Savings Account.

Review your W-4  -  Post-tax season is the perfect time to look over your W-4 to determine if you’re withholding too much money — or too little. Remember: A generous tax refund might seem like good news, but what it really means is that you’ve been giving the government an interest-free loan throughout the year. You don’t want to withhold too little money and end up with a big tax bill to pay at the end of the year, either. To find that perfect sweet spot, work out the numbers using the IRS’ withholding calculator; use tax software like Turbo Tax; or ask a professional accountant to help. Don’t forget to submit a new W-4 to your workplace with your new withholding amount in place.

Protect your personal information - Now that you’ve paid your taxes, it’s a good time to get rid of any documents that can compromise your safety. In today’s digital world, there are very few hard-copy documents you’ll need to hold onto. You can safely shred account statements, credit card bills, utility bills, insurance bills and more. Make sure to keep a copy of anything that requires your signature, such as the deed of your home and your car title, and hold onto unpaid loan statements and your tax returns. Keep these papers, as well as your most important sensitive documents, like your Social Security card, birth certificate and marriage certificate, in a fireproof box or in a locked file cabinet.

It’s also a good idea to clean up your computer and phone, deleting any downloaded documents that can compromise your privacy and deactivating your accounts on websites you no longer frequent. You may want to let your devices “forget” your password and payment history on retail sites as well. The less of your life you have online, the lower the risk of your personal information being compromised if any of these sites is hacked.

Throw away a debt - Did you resolve to work aggressively toward paying down your debts this year? Dust off that New Year’s resolution and take a hard look at your progress this spring. Is the debt going anywhere, or are you still trapped in the cycle of making just minimum payments that mostly go toward interest?

Get serious about getting out of debt by making a list of all debt in order from smallest to largest. Work out a plan for maximizing your payments on this debt, acquiring the necessary funds by pruning an expense category on your monthly budget or taking on some freelance work for extra cash. Once you’ve paid off the smallest debt, work on the next-smallest debt until you’re completely debt-free. As you progress through your list, be sure not to neglect the minimum payments on any of your debts.

 

Episode #18 What kind of down payment should you have when looking to buy a home?

Are you getting ready to own a home of your own?

If that’s your dream, you are likely saving up, dollar by hard-earned dollar, until you have that magic number: 20% of your dream home’s total value. That’s what all the experts say, right?

For the average American home, 20% amounts to a pretty big number. Throw in closing costs and you’ve got a small fortune to raise – and years to go until you reach your goal.

It’s great that you’re putting money away toward what will likely be the largest purchase of your life, but there’s one huge mistake in your calculations: You don’t need to put down 20%.

Yes, you read right. The 20% myth is an unfortunate leftover from the era after the housing crisis, when out of necessity, access to credit tightened up. Thankfully, times have changed, and since FHA loans were introduced more than 80 years ago, mortgages have not required a 20% down payment.

While it’s true that a higher down payment means you’ll have a smaller monthly mortgage payment, there are lots of reasons why this isn’t always the best road to owning a home.

Let’s explore loan options that don’t require 20% down and take a deeper look at the pros and cons of making a smaller down payment.

Loan options

If you’d like to go the route of government-backed loans, these are your options:

1.  FHA mortgage: This loan is aimed at helping first-time home buyers and requires as little as 3.5% down. If that number is still too high, the down payment can be sourced from a financial gift or via a Down Payment Assistance program.

2. VA mortgage: VA mortgages are the most forgiving, but they are strictly for current and former military members. They require zero down, don’t require mortgage insurance and they allow for all closing costs to come from a seller concession or gift funds.

If you’d rather take out a conventional loan, though, you can choose from the following loan types:

1. 3% down mortgage: Many lenders will now grant mortgages with borrowers putting as little as 3% down. Some lenders, like Freddie Mac, even offer reduced mortgage insurance on these loans, with no income limits and no first-time buyer requirement.

2. 5% down mortgage: Lots of lenders allow you to put down just 5% of a home’s value. However, most insist that the home be the buyer’s primary residence and that the buyer has a FICO score of 680 or higher.

3. 10% down mortgage: Most lenders will allow you to take out a conventional loan with 10% down, even with a less-than-ideal credit score.

Bear in mind that each of these loans requires income eligibility. Additionally, putting less than 20% down usually means paying for PMI, or private mortgage insurance. However, if you view your home as an asset, paying your PMI is like paying toward an investment. In fact, according to TheMortgageReports.com, some homeowners have spent $8,100 in PMI over the course of a decade, and their home’s value has increased by $43,000. That’s a huge return on investment!

Why make a smaller payment?

If you’re thinking of waiting and saving until you have 20% to put down on a home, consider this: A RealtyTrac study found that, on average, it would take a homebuyer nearly 13 years to save for a 20% down payment. In all that time, you could be building your equity – and home prices may rise. Rates likely will as well.

Other benefits to putting down less than 20% include the following:

  • Conserve cash: You’ll have more money available to invest and save.
  • Pay off debt: Many lenders recommend using available cash to pay down credit card debt before purchasing a home. Credit card debt usually has a higher interest rate than mortgage debt – and it won’t net you a tax deduction.
  • Improve your credit score: Once you’ve paid off debt, expect to see your score spike. You’ll land a better mortgage rate this way, especially if your score tops 730.
  • Remodel: Few homes are in perfect condition as offered. You’ll likely want to make some changes to your new home before you move in. Having some cash on hand will allow you to do that.
  • Build an emergency fund: As a homeowner, having a well-stocked emergency fund is crucial. From here on, you’ll be the one paying to fix any plumbing issues or leaky roofs.

Cons of smaller down payments

In all fairness, there are some drawbacks of making a smaller down payment.

  • Mortgage insurance: A PMI payment is an extra monthly expense piled on top of your mortgage and property tax.  As mentioned above, though, PMI can be a good investment.
  • Potentially higher mortgage rates: If you’re taking out a conventional loan and making a smaller down payment, you can expect to have a higher mortgage rate. However, if you’re taking out a government-backed loan, you’re guaranteed a lower mortgage rate despite a less-than-robust down payment.
  • Less equity: You’ll have less equity in your home with a smaller down payment. Of course, unless you’re planning to sell in the next few years, this shouldn’t have any tangible effect on your homeownership.

Of course this doesn’t mean you should buy a home no matter how much – or how little – you’ve got in your savings account. Before making this decision, be sure you can really afford to own a home. Ideally, your total monthly housing costs should amount to less than 28% of your monthly gross income.

Ready to buy your dream home? We’d love to help you out! Call, click or stop by MembersAlliance CU today to learn about our fantastic mortgage rates. We’ll walk you through all the way to the closing!

Episode #19 Are you thinking of buying a new car? What are additional protections such as GAP and MRC and does it make sense to add these? 

GAP stands for Guaranteed Asset Protection. It covers the difference between the value of your vehicle and the amount you owe on it if were to be in a major accident. GAP insurance covers the difference, because even if you total your car, you’re still responsible for the full loan amount.

MRC stands for Mechanical Repair Coverage and serves as an aftermarket warranty on your vehicle. Vehicle repairs can be expensive and often times $500, $1000, $2500, or even $5000+ repairs can put a strain on your finances. With the MRC you’ll be able to have expensive repairs covered with just a small deductible.

Often times both the GAP and MRC programs are able to be included in your vehicle loan with MembersAlliance so you’re actually paying for the cost of each spaced out over the lifetime of your auto loan. If you’d like to learn more about these programs, auto loans with MembersAlliance, or any other loan related questions, checkout our auto loan page here or give us a call to speak with one of our loan specialists today!

Episode #20 Budgeting?! Where do I even start?!

Making a budget and sticking to it can seem scary, overwhelming, and complicated. But, whether it’s a pen, a computer or a free mobile app, there’s plenty of tools available. Creating and sticking to a monthly budget will force you to be accountable for your spending while giving you a clear idea of your financial reality.

In 3 steps:

  • Track your spending over three months.
  • Divide your expenses into categories, such as mortgage, groceries, etc. Use an average of the last three months to set a reasonable spending limit for each category.
  • Going forward, track your spending and be sure to stick to your preset limits for each category.

If your budget reveals your monthly income doesn’t cover your expenses, or you find you’re overspending in any area, look for ways to cut back.

Carrying long-term debt can mean paying exorbitant amounts of interest for years on end. It can also devastate your credit score. Make a complete list of all your outstanding debts in order from smallest balance to largest. Review your monthly budget and look for ways to cut back. Work on paying off your smallest debt with the money you trimmed from your budget. Once you’ve paid off that debt, move on to the second-smallest. Repeat until you’re completely debt-free.

How MembersAlliance CU can help: If you’re carrying multiple high-interest rate debts, consider consolidating those debts to one easy monthly payment with a personal loan, home equity loan, or credit card balance transfer. This way, you’ll only have one low-interest loan payment each month. It may even reduce the total amount you’ll pay each month. Speak to a representative at MembersAlliance CU today to discuss this option or click here to apply.

Finally, make room in your budget for saving. We use the mantra “pay yourself first”. What we mean is…look at your savings account as a bill you have to pay. According to the Federal Reserve, 40 percent of Americans can’t cover a $400 expense. Living without a safety net means a relatively small, unexpected expense can throw off your finances and force you into debt. Aside for paying for emergencies, savings can help fund your long-term plans, goals and dreams.

Episode #21 Are you using the credit card best suited to meet your needs?

There are a lot of credit card programs out there and often consumers can find themselves with a card that isn’t really benefitting them. Most credit cards these days offer some sort of rewards/cash back program which is great but shouldn’t be your only consideration.

Sure, maximizing rewards is great when you’re able to pay off your credit card every month, but the fact is, the majority of us aren’t able to do that all the time. According to NerdWallet as of 6/2019:

  • 55% of Americans don’t pay off their credit card debt monthly
  • Have an average interest rate of 17.30%APR or Annual Percentage Rate
  • The average balance is approximately $8,400

There are plenty of factors to consider when selecting the right credit card for you. Unless you’re consistently able to pay off your balance every month, rewards, style, and brand should not be at the top of the list. They can and certainly will still be factors, but don’t let them be the driving force in your decision process. Start with interest rate, then look at fees associated with the card, then consider features like cash advance accessibility, late/early payment terms, local servicing and support, all to help determine the right fit.

Also, retail store cards may have some benefits you value but be extra weary of their interest rates. Commonly 25% and higher these cards can end up handcuffing consumers with payments they simply cannot afford.

If you’d like to learn more about the unique features available with the MembersAlliance VISA Credit Card, you can learn more HERE.

Episode #22 MembersAlliance recommends you pay yourself first! Consider making your savings account a reoccurring bill you have to pay.

It’s never too early or too late to get in the habit of saving, but the sooner you start the easier it becomes! MembersAlliance strongly encourage the motto “Pay yourself first”. Whether your passionate about your work or you work to support things you’re passionate about…or maybe a little bit of both, we all need to be able to support the necessities in life (Food, shelter, clothing, healthcare) and you never know when one those is going to be effected by a costly home or auto repair, job loss, or health issue.

Making a savings account a “bill” you have to pay each month is not only a good habit for saving for vacations, holiday expenses, and more, it’s a necessity when the inevitable unexpected happens. We all know it will come, we just don’t know when. Having the money set aside in a savings account will definitely soften the blow vs. scrambling to figure how to pay for an emergency dental bill, an engine repair, or a furnace replacement.

Pay yourself first simply means setting up your direct deposit to split a determined amount, or automatically transfer when it comes in, to one or more savings account each and every paycheck. Once it’s automated you can better budget your spending from what you have available in your checking account and confidently save for future goals and the inevitable “unexpected”. Set up auto transfers online or talk to one of our member support specialists today.

Episode #23 Did you know home equity loans can be an affordable way to cover expenses beyond just home improvements?

Home Equity loans are a great way to use equity you’ve built up in your home over the years to do some home improvements, updates, additions, and remodels. But, did you also know you can utilize that equity to pay down some high interest debts or cover some larger expenses coming up? Regardless of the debt, if it already exists, it usually makes sense to make sure you’re paying the least amount in interest back that you can so you can pay it off sooner. It only makes sense that every $400 payment with a 3 or 4% interest rate pays off a loan much faster than at a 7-8% interest rate or higher. If you’re looking at consolidating debts look at the equity in home to see if it’s an option.

It might be the right choice for some expenses you have coming up too! Whether it’s a wedding, tuition costs, or any number of large expenses, a home equity loan could be just what you need. Plus, as an added protection to protect yourself against the unexpected life sometimes throws at us, you can consider a Home Equity Line of Credit (HELOC) so the funds are available and ready when you need them most, and you only make a payment on it when you owe a balance. It’s almost like a credit card with low interest rate and a potentially higher limit. Learn more here or talk to one of our loan specialists for more information today.

Episode #24 MembersAlliance recommends maintaining 3-6 months of income in your savings for the unexpected.

It’s important to create an emergency fund. If you don’t have money socked away for unexpected expenses, you’ll be tempted to use the money that’s already earmarked for your debt payments to fund this expense.

Experts recommend keeping three-six months’ worth of living expenses in an emergency fund, but you can start with a modest $1,000. Set up an automatic monthly or weekly transfer from your MembersAlliance CU Checking Account to your Savings Account until you have a fully padded emergency fund. This may take several months, but no worries, you can continue following the next few steps toward a debt-free life as your emergency fund grows.

Emergencies are always unexpected when they happen but the reality is we all know they are going to happen. Home/auto repairs, medical emergencies, or unexpected job loss happen every day. If they were to happen to you, are you prepared? It’s never too late to start.

Episode #25 Why is it a good idea to get preapproved before car shopping?

It all comes down to knowing what you’re paying. Sure, you can probably get approved at the dealership, and you’ll know what your monthly payment is when you leave, but the devil is in the details, as they say. Once you’ve fell in love with the vehicle and told the salesman what you can afford, their finance guys begin working on different ways to make it work or get close so you’ll still leave that day with a new car purchase under your belt and another sale under theirs.

This is all fine and good but sometimes to make this work, they will put you in a loan that is much longer than you really want a car loan for and potentially much higher of an interest rate than you are comfortable paying. You might be sold on $250 a month. But if they emphasized it was 90 months and or 8 or 9% interest, would you be equally excited?!

The whole point of getting preapproved is knowing how much you’re comfortable spending, for how long, and what type of interest rate is realistic and acceptable to you. You may ultimately finish the loan at the dealership rather than your credit union, who knows - they may even have a better offer available – but one thing is for certain, if you go into it prepared, you’ll be sure you’re steering the negotiation and not the one getting steered. Learn more or get preapproved here.

Episode #26 How much of your income should you consider spending on a home purchase?

The right answer is: there is no right answer. To avoid paying PMI (Private Mortgage Insurance) you’ll need to have 20% down, but you can certainly put less down and still buy your dream home, starter home, or somewhere in between.

For the average American home, 20% amounts to a pretty big number. Throw in closing costs and you’ve got a small fortune to raise – and years to go until you reach your goal.

It’s great that you’re putting money away toward what will likely be the largest purchase of your life, but there’s one huge mistake in your calculations: You don’t need to put down 20%.

Yes, you read right. The 20% myth is an unfortunate leftover from the era after the housing crisis, when out of necessity, access to credit tightened up. Thankfully, times have changed, and since FHA loans were introduced more than 80 years ago, mortgages have not required a 20% down payment.

While it’s true that a higher down payment means you’ll have a smaller monthly mortgage payment, there are lots of reasons why this isn’t always the best road to owning a home. With loan options available with as little as 3% down, your path to home ownership could be closer than you think!

Of course this doesn’t mean you should buy a home no matter how much – or how little – you’ve got in your savings account. Before making this decision, be sure you can really afford to own a home. Ideally, your total monthly housing costs should amount to less than 28% of your monthly gross income.

Ready to buy or have some questions? We’d love to help you out! Call, click or stop by MembersAlliance CU today to learn about our fantastic mortgage rates. We’ll walk you through all the way to the closing!

Episode #27 MembersAlliance recommends monitoring your credit report.

There’s a lot of advertisements these days about knowing your credit score. Knowing you’re a score is great information to have but understanding what’s behind the score and what is on your credit report is way more important. It not only helps identity understand what is reported on your credit report, make sure it is accurate, and learn to maximize your score, but it also helps identify ID.

So, how do you check your credit report? You’re entitled to an annual credit report from each of the three major credit reporting agencies. Order yours at www.annualcreditreport.com.

If you notice any discrepancies you can dispute those and have them corrected for all three credit bureaus right on the site. It is estimated over 20% (1 in 5) of people have errors on their credit report. Have more questions? Talk to one of our member support specialists today!

Episode #28 MembersAlliance recommends that you look into college planning as soon as possible.

It is never too early to consider filing to maximize your potential benefits within your state. Filing became available October 1, 2019 for the 2020/2021 school year with a deadline of June 30, 2021. For more information on FAFSA requirements and deadlines visit FAFSA.gov.

You should also double check enrollment and application deadlines with your selected college/university. It’s important to note schools and states all may have varying deadlines. The same goes for different scholarships and grants.

If you’ve done all the financial aid requests and still have a funding gap, take a look at our student loan program with Student Choice.

Episode #29 MembersAlliance recommends that you do not click on links or images from unknown sources on the internet or through email.

Email and Internet links are a common way for fraudsters to try and gain access to your information. If the email is unexpected or unusual in anyway or you are on a website that may not be secure, do not click on links or open attachments. These can download malware, spyware, ransomware, or any number of viruses that could attack existing apps or files or your computer or phone that contain personal information.

When it comes to your money and your personal information, it is as important as ever to protect yourself from criminals and fraudsters. Technology has made our lives remarkably easier and access to information and services notably faster. Unfortunately, this also leaves us and our information more vulnerable to those who may want to misuse that information for personal gain. There are a variety of ways you can protect yourself, to help limit the potential access to your information. You should also regularly monitor your credit report (you can do this for free at www.annualcreditreport.com), and if you suspect fraud or worry what others may have access to you can look at enrolling in Identity Protection to monitor your information and protect you when identity thieves attempt to access or use your information.

Episode #30 MembersAlliance recommends when purchasing a home to do your research ahead of time and review your borrowing options with a mortgage professional.

Are you thinking about buying a home?

First, congratulations! Although many experts recommend 20% down, and this is typically the threshold to avoid paying extra insurance on the loan, you can work your way to that level and start your first mortgage and home purchase with as little as 3-3.5% down.

For the average American home, 20% amounts to a pretty big number. Throw in closing costs and you’ve got a small fortune to raise – and years to go until you reach your goal. It’s great that you’re putting money away toward what will likely be the largest purchase of your life, but there’s one huge mistake in your calculations: You don’t need to put down 20%.

While it’s true that a higher down payment means you’ll have a smaller monthly mortgage payment, there are lots of reasons why this isn’t always the best road to owning a home.

Let’s explore loan options that don’t require 20% down and take a deeper look at the pros and cons of making a smaller down payment.

Loan options

If you’d like to go the route of government-backed loans, these are your options:

1.  FHA mortgage: This loan is aimed at helping first-time home buyers and requires as little as 3.5% down. If that number is still too high, the down payment can be sourced from a financial gift or via a Down Payment Assistance program.

2. VA mortgage: VA mortgages are the most forgiving, but they are strictly for current and former military members. They require zero down, don’t require mortgage insurance and they allow for all closing costs to come from a seller concession or gift funds.

If you’d rather take out a conventional loan, though, you can choose from the following loan types:

1. 3% down mortgage: Many lenders will now grant mortgages with borrowers putting as little as 3% down. Some lenders, like Freddie Mac, even offer reduced mortgage insurance on these loans, with no income limits and no first-time buyer requirement.

2. 5% down mortgage: Lots of lenders allow you to put down just 5% of a home’s value. However, most insist that the home be the buyer’s primary residence and that the buyer has a FICO score of 680 or higher.

3. 10% down mortgage: Most lenders will allow you to take out a conventional loan with 10% down, even with a less-than-ideal credit score.

Bear in mind that each of these loans requires income eligibility. Additionally, putting less than 20% down usually means paying for PMI, or private mortgage insurance. However, if you view your home as an asset, paying your PMI is like paying toward an investment. In fact, according to TheMortgageReports.com, some homeowners have spent $8,100 in PMI over the course of a decade, and their home’s value has increased by $43,000. That’s a huge return on investment!

Why make a smaller payment?

If you’re thinking of waiting and saving until you have 20% to put down on a home, consider this: A RealtyTrac study found that, on average, it would take a homebuyer nearly 13 years to save for a 20% down payment. In all that time, you could be building your equity – and home prices may rise. Rates likely will as well.

Other benefits to putting down less than 20% include the following:

  • Conserve cash: You’ll have more money available to invest and save.
  • Pay off debt: Many lenders recommend using available cash to pay down credit card debt before purchasing a home. Credit card debt usually has a higher interest rate than mortgage debt – and it won’t net you a tax deduction.
  • Improve your credit score: Once you’ve paid off debt, expect to see your score spike. You’ll land a better mortgage rate this way, especially if your score tops 730.
  • Remodel: Few homes are in perfect condition as offered. You’ll likely want to make some changes to your new home before you move in. Having some cash on hand will allow you to do that.
  • Build an emergency fund: As a homeowner, having a well-stocked emergency fund is crucial. From here on, you’ll be the one paying to fix any plumbing issues or leaky roofs.

Cons of smaller down payments

In all fairness, there are some drawbacks of making a smaller down payment.

  • Mortgage insurance: A PMI payment is an extra monthly expense piled on top of your mortgage and property tax.  As mentioned above, though, PMI can be a good investment.
  • Potentially higher mortgage rates: If you’re taking out a conventional loan and making a smaller down payment, you can expect to have a higher mortgage rate. However, if you’re taking out a government-backed loan, you’re guaranteed a lower mortgage rate despite a less-than-robust down payment.
  • Less equity: You’ll have less equity in your home with a smaller down payment. Of course, unless you’re planning to sell in the next few years, this shouldn’t have any tangible effect on your homeownership.

Of course this doesn’t mean you should buy a home no matter how much – or how little – you’ve got in your savings account. Before making this decision, be sure you can really afford to own a home. Ideally, your total monthly housing costs should amount to less than 28% of your monthly gross income.

Ready to buy your dream home? We’d love to help you out! Call, click or stop by MembersAlliance CU today to learn about our fantastic mortgage rates. We’ll walk you through all the way to the closing!

Episode #31 Do you know the differences between a credit union and a bank?

Both credit unions and banks provide those they serve with a broad range of financial services and products. However, there are multiple distinctions between the two institutions. The primary credit union difference lies at its core: Banks are created to generate profit for their owners; credit unions are created to provide members with a place to manage their finances at the best possible terms.

The noble goal of putting members first is deeply rooted in the rich history of the credit union movement. Credit unions were gaining popularity and popping up all over America, but it was only in the 1930s that the credit union movement achieved federal recognition and national acceptance.

When President Franklin Delano Roosevelt signed the Federal Credit Union Act into law in 1934, federally chartered credit unions in every state became legally authorized to create a system of not-for-profit cooperatives to promote thrift and sound financial practices.

Starting mainly with savings accounts and smaller sized loans, over time credit unions were authorized to offer more and more financial services to their members now offering virtually any type of financial product you may need. Today, the credit union movement continues to thrive in the path charted by its predecessors by always putting their members’ needs first and helping them achieve their personal goals through sound financial practices and targeted advice.

Let’s take a quick look at some of the benefits you can enjoy as a member of MembersAlliance CU.

1. Highly personalized service

2. Increased value for your money

3. A voice in how the credit union operates

4. A chance to give back to the community

Here at MembersAlliance, we’re proud to be a part of the collective institutions dedicated to the credit union mission. At the core of our values is an unwavering commitment to creating mutual benefits for members and the larger community. When you choose MembersAlliance, you’re choosing to give back to the community, too. To that end, we are always here to help our members and enable them to optimize their savings or manage their finances as smoothly as possible. Our innovative banking solutions, low fees, along with personalized service, help members achieve and maintain financial wellness no matter the financial goals they have. As a member-owned institution, our only objective is your satisfaction and your success.

Episode #32 What’s the benefit of having a home equity loan?

Home Equity loans are a great way to use equity you’ve built up in your home over the years to do some home improvements, updates, additions, and remodels. As an added option, it can also serve as protection against the unexpected life sometimes throws at us. With a Home Equity Line of Credit (HELOC) the funds are approved and just ready and waiting, available when you need them most. The best part is…you only make a payment on it when you owe a balance! It’s almost like a credit card with low interest rate and a potentially higher limit.

On top of all this, you can utilize home equity to pay down some high interest debts or cover some larger expenses coming up. Regardless of the debt, if it already exists, it usually makes sense to make sure you’re paying the least amount in interest back that you can so you can pay it off sooner. It only makes sense that every $400 payment with a 3 or 4% interest rate pays off a loan much faster than at a 7-8% interest rate or higher. For larger expenses, whether it’s a wedding, tuition costs, or any number of large expenses, a home equity loan could be just what you need as well.

If you’re looking at consolidating debts or may have some expenses coming a home equity loan or Home Equity Line of Credit (HELOC) might be the answer for you. Learn more here or talk to one of our loan specialists for more information today.